S&P Lifts California Credit Outlook To Stable

Standard & Poor's revised California's credit outlook from
negative to stable today — a rare bit of good news in an
otherwise
grim state budget season.

The revision comes just days after California passed its
first on-time budget in 10 years. The $129.5 billion spending
agreement relies on economic improvement and spending cuts to
close a projected $26.6 billion budget shortfall. The deal also
includes triggers for additional cuts if the economy does not
improve.

The ratings agency cited an improved balance between state
revenue and spending as the primary reason for raising
California's outlook.

"There is a possibility down the road for a higher rating,"
S&P credit analyst Gabriel Petek
told Reuters. "I think that it would be somewhat contingent
on the state following through, if the revenues don't
materialize, and successfully implementing the cuts that they
have included in this budget."